Tuesday, July 19, 2016

After Brexit, the IMF forecasts global growth downward – The World

” the referendum results British, who caught the global financial markets, represent the realization of a significant downside risk to the global economy “ says the institution of Washington in the update of its’ prospects of Mondial economy “. “This uncertainty would undermine confidence and investment, including its impact on the financial situation and, more generally, on climate markets. “

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” the Brexit threw a grain of sand “ in the mechanics of the global recovery, said Maury Obstfeld, chief economist of the IMF, in his speech of presentation of prospects. Without this event, the institution would likely revised its forecast upward …

The European Union in the first line

in detail, the global economy should grow 3.1% in 2016 and 3.4% in 2017, against 3.2% and 3.5% estimated in April. “The economies of the UK and Europe will be most affected by the results of the June 23 referendum,” the IMF said.

German GDP will be more affected than that of France. The tricolor growth will lose 0.1 points in 2017

In fact, British growth to fall to 1.7% in 2016 and 1.3% in 2017, against 1.9 % and 2.2% estimated in April. The Brexit and other uncertainties affecting the business amputeront gross domestic product of the euro area by 0.2 point in 2017. It thus grow by 1.4%, after 1.6% in 2016. German GDP will be affected than that of France is expected to increase 1.2% in 2017, against 1.6% expected in April, while the tricolor that growth will lose 0.1 points in 2017 to 1.2% after 1.5% in 2016

Read also:. because of Brexit, IMF revises down French growth

According to the IMF, impact of Brexit would be “relatively negligible elsewhere, including the US and China.” The US economy is expected to grow 2.2% in 2016 and 2.5% in 2017, and that of China, 6.6% and 6.2%. Emerging and developing economies should for their advance 4.1% in 2016 and 4.6% in 2017. Also there the Brexit would have no impact

Several scenarios bearish related Brexit

institution economists still very cautious. “The outcome of Brexit to be defined, the uncertainty is such that it complicates the already difficult task of macroeconomic forecasting ‘, they said in the report. Their central scenario “is based on the favorable assumption of a gradual decline in uncertainty, an agreement between the European Union and the United Kingdom without a significant increase in economic barriers, lack of disturbance major financial markets and the limited political fallout from the referendum “.

But other scenarios are possible. The IMF defines two. In the first, the “bearish” uncertainties be prolonged, and trust deteriorate more than in the central scenario. In this case, global growth would be not more than 3.1% in 2016 and 3.4% in 2017, but 2.9% and 3.1%.

in the scenario called “degraded” much of the UK financial services relocaliserait in the eurozone and Britain would plunge into recession

for their part, the developed countries would record a GDP increase of 1.5% in 2016 and 2017, against 1.8% in both years in the central scenario. This time, emerging and developing countries would also be affected. GDP would lose 0.1 points in 2016, falling to 4%, and 0.2 in 2017 to 4.4%.

In the said scenario “degraded” darker but less likely, the United Kingdom and the European Union fail to define new trade agreements of free trade. Much of the UK financial services relocaliserait eurozone and Britain would plunge into recession. In this case, the impact on savings would be deeper. Global growth would fall to 2.8% in 2016 and 2017, that of developed countries to 1.4% in 2016 and 1% in 2017, and that of emerging countries to 3.9% in 2016 and 4.2% in 2017 .

many other risks to the global economy

But the Brexit is not the only downside weighing on the recovery. The other concerns are many, and the list that the institution’s cold gives back. “The shock of Brexit occurs while the European banking system, including Portuguese and Italian institutions have not corrected the aftermath of the crisis,” , she said.

many emerging countries still face falling commodity prices and the slowdown in China, while “failover to further protectionist policies is a clear threat” . But the risks are also geopolitical, as tensions in the Middle East.

Finally, add the funds, “political divisions in developed countries may undermine efforts to correct structural problems long and the refugee problem. “

An indispensable support for demand to revive growth

in response, the government can still act. Central banks have done their share of work to stabilize markets after Brexit. It is now the European and British political leaders to act to resolve uncertainties, the IMF said. But also to support the business.

“Faced with these challenges, it remains essential to combine measures to support demand in the short term and structural reforms to reinvigorate growth medium term “, detailing the institution’s economists. Include: increasing investment and public spending where fiscal space allows, as in Germany. But also continue measures to stabilize the financial and banking sector remains fragile, particularly in the euro area.

Finally, the IMF urges governments to be ready to take concerted action in case a new slowdown in global growth would require the